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ASPIRA WOMEN'S HEALTH INC.

(AWH)
  Report
Delayed Nasdaq  -  04:00 2022-09-30 pm EDT
0.3722 USD   -4.56%
09/19Aspira Women's Health Inc.(NasdaqCM:AWH) dropped from S&P Global BMI Index
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09/12Aspira Women's Health Announces Publication of its Second-Generation MultiVariate Index Assay, OVERA®, in the Detection of Cancer in Filipino Women
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09/12Aspira Women's Health Inc. Announces Publication of Its Second-Generation Multivariate Index Assay, Overa®, in the Detection of Cancer in Filipino Women
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ASPIRA WOMEN'S HEALTH INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/10/2022 | 05:25pm EDT

Forward-Looking Statements


This Quarterly Report on Form 10-Q contains forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks and uncertainties. Words such as
"may," "expects," "intends," "anticipates," "believes," "estimates," "plans,"
"seeks," "could," "should," "continue," "will," "potential," "targeted,"
"projects" and similar expressions are intended to identify such forward-looking
statements. Readers are cautioned that these forward-looking statements speak
only as of the date on which this Quarterly Report on Form 10-Q is filed with
the Securities and Exchange Commission (the "SEC"), and, except as required by
law, Aspira Women's Health Inc. ("Aspira" and, together with its subsidiaries,
the "Company," "we," "our," or "us") does not assume any obligation to update,
amend or clarify them to reflect events, new information or circumstances
occurring after such date.
Examples of forward-looking statements include, without limitation:
?projections or expectations regarding our future test volumes, revenue, cost of
revenue, operating expenses, research and development expenses, gross profit
margin, cash flow, results of operations and financial condition;
?our plan to broaden our commercial focus from ovarian cancer to differential
diagnosis of women with a range of gynecological diseases, including additional
pelvic disease conditions such as endometriosis and, benign pelvic mass
monitoring in addition to genetics risk assessment, including breast and ovarian
cancer hereditary risk assessment and carrier screening;
?our planned business strategy and strategic business drivers and the
anticipated effects thereof, including partnerships such as those based on our
Aspira Synergy product, as well as other strategies, specimen collaboration and
licensing;
?plans to expand our existing products OVA1, OVERA, OVA1plus, Aspira GenetiX and
Aspira Synergy on a global level, and to launch and commercialize our new
products, OVAWatch, EndoCheck and OVAInherit;
?plans to develop new algorithms, molecular diagnostic tests, products and tools
and otherwise expand our product offerings, including plans to develop a product
using genetics, proteins and other modalities to assess the risk of developing
cancer when carrying a pathogenic variant associated with hereditary breast and
ovarian cancer that is difficult to detect through a diagnostic test;
?plans to establish payer coverage and secure contracts for current and new
products, including OVA1, OVERA, OVA1plus, Aspira GenetiX, OVAWatch, EndoCheck
and OVAInherit separately and expand current coverage and secure contracts for
OVA1;
?plans that would address clinical questions related to early disease detection,
treatment response, monitoring of disease progression, prognosis and other
issues in the fields of oncology and women's health;
?anticipated efficacy of our products, product development activities and
product innovations, including our ability to improve sensitivity and
specificity over traditional diagnostic biomarkers;
?expected competition in the markets in which we compete;
?plans with respect to Aspira Labs, Inc. ("ASPiRA LABS"), including plans to
expand or consolidate ASPiRA LABS' testing capabilities;
?expectations regarding continuing future services provided by Quest Diagnostics
Incorporated;
?plans to develop informatics products and develop and perform laboratory
developed tests ("LDTs");
?FDA oversight changes of LDTs;
?plans to develop a race or ethnicity-specific pelvic mass risk assessment;
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?expectations regarding existing and future collaborations and partnerships for
our products, including plans to enter into decentralized arrangements for our
Aspira Synergy product and provide and expand access to our risk assessment
tests;
?plans regarding future publications;
?expectations regarding potential collaborations with governments, legislative
bodies and advocacy groups to enhance awareness and drive policies to provide
broader access to our tests;
?our ability to continue to comply with applicable governmental regulations,
expectations regarding pending regulatory submissions and plans to seek
regulatory approvals for our tests within the United States and internationally,
as applicable;
?our continued ability to expand and protect our intellectual property
portfolio;
?anticipated liquidity and capital requirements;
?anticipated future losses and our ability to continue as a going concern;
?expectations regarding raising capital and the amount of financing anticipated
to be required to fund our planned operations;
?expectations regarding the results of our clinical research studies and our
ability to recruit patients to participate in such studies;
?our ability to use our net operating loss carryforwards and anticipated future
tax liability under U.S. federal and state income tax legislation;
?expected market adoption of our diagnostic tests, including OVA1, OVERA,
OVA1plus, as well as our offerings of Aspira GenetiX and Aspira Synergy
platform;
?expectations regarding our ability to launch new products we develop or
license, co-market or acquire new products;
?expectations regarding the size of the markets for our products;
?expectations regarding reimbursement for our products, and our ability to
obtain such reimbursement, from third-party payers such as private insurance
companies and government insurance plans;
?plans to use each of AbbVie Inc. serum samples and ObsEva S.A. plasma samples
in EndoCheck product validation studies;
?potential plans to pursue clearance designation with the FDA with respect to
EndoCheck;
?expected target launch timing for OVAWatch and EndoCheck;
?expectations regarding compliance with federal and state laws and regulations
relating to billing arrangements conducted in coordination with laboratories;
?plans to advocate for legislation and professional society guidelines to
broaden access to our products and services;
?expectations regarding the impacts resulting from or attributable to the
COVID-19 pandemic and actions taken to contain it; and
?expectations regarding the results of our academic research agreements.

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by the section entitled "Risk Factors" in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, including our ability to continue as a going concern; our ability to comply with Nasdaq's continued listing requirements; impacts resulting from or relating to the COVID-19 pandemic and actions taken to contain it; anticipated use of capital and its effects; our ability to increase the volume of our product sales; failures by third-party payers to reimburse for our products and services or changes to reimbursement rates; our ability to continue developing existing technologies and to develop, protect and promote our proprietary technologies; plans to develop and perform LDTs; our ability to comply with Food and Drug Administration ("FDA") regulations that relate to our products and to obtain any FDA clearance or approval required to develop and commercialize medical devices; our ability to develop and commercialize additional diagnostic products and achieve market acceptance with respect to these products; our ability to compete successfully; our ability to obtain any regulatory approval required for our future diagnostic products; or our suppliers' ability to comply with FDA requirements

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for production, marketing and post-market monitoring of our products; our ability to maintain sufficient or acceptable supplies of immunoassay kits from our suppliers; in the event that we succeed in commercializing our products outside the United States, the political, economic and other conditions affecting other countries; changes in healthcare policy; our ability to comply with environmental laws; our ability to comply with the additional laws and regulations that apply to us in connection with the operation of ASPiRA LABS; our ability to use our net operating loss carryforwards; our ability to use intellectual property; our ability to successfully defend our proprietary technology against third parties; our ability to obtain licenses in the event a third party successfully asserts proprietary rights; the liquidity and trading volume of our common stock; the concentration of ownership of our common stock; our ability to retain key employees; our ability to secure additional capital on acceptable terms to execute our business plan; business interruptions; the effectiveness and availability of our information systems; our ability to integrate and achieve anticipated results from any acquisitions or strategic alliances; future litigation against us, including infringement of intellectual property and product liability exposure; and additional costs that may be required to make further improvements to our laboratory operations. Company Overview


Corporate Vision
Our core mission is to transform the state of women's health, globally, starting
with ovarian cancer. We aim to eradicate late-stage detection of ovarian cancer
and to ensure that our solutions will meet the needs of women of all ages,
races, ethnicities and stages of the disease. Our core patient goal is to
develop a lifelong relationship with each patient, ensuring each woman has
access to best-in-class risk assessment tools.
Our plan is to broaden our commercial focus from ovarian cancer to differential
diagnosis of women with a range of gynecological diseases. We plan to continue
commercializing our new generation of technology as well as distribute our
technology through our decentralized technology transfer service platform, known
as "Aspira Synergy." We also intend to raise public awareness regarding the
diagnostic superiority of OVA1plus as compared to cancer antigen 125 ("CA125")
for all women, but especially for racially diverse women with adnexal masses, as
well as the importance of machine learning algorithm development in different
racial and ethnic populations. We also plan to advocate for legislation and
professional society guidelines to provide broad access to our products and
services.
All of our products are focused on gynecologic diseases that cannot be assessed
through a traditional biopsy, or can only be detected by invasive procedures in
the case of endometriosis, making our non-invasive blood biopsy more efficient
and patient friendly. We maintain medical and advisory support and a Key Opinion
Leader Network aligned with our territories in the U.S. In addition to adding to
our direct salesforce, in 2021, we added OVA1 and OVA1plus on our technology
transfer platform, Aspira Synergy. In 2022, we have continued to commercialize
OVA1plus by utilizing select partnerships for distribution, expanding our
managed care coverage and contracts in select markets, growing our sales force,
increasing adoption with our existing and new customers, and further deploying
our Aspira Synergy technology transfer platform. We also plan to develop an LDT
series of diagnostic algorithms. In 2021, we expanded access to our tests among
Medicaid patients as part of our corporate mission to make the best care
available to all women.
Throughout 2022, we have been focused on our three key initiatives: growth,
innovation, and operational excellence:

?Growth. In 2022, we have continued to grow the top line in terms of both product volume and revenue. Our focus has been on OVA1plus, and, in the second half of 2022, we plan to drive OVA1plus sales volume not only through our own commercial team but also through our collaboration with BioReference Health, LLC, formerly known as BioReference Laboratories, Inc. ("BRL"). We believe Aspira GenetiX and Aspira Synergy should also contribute to increased revenue. In addition, positive trends in the tenure of our sales professionals should lead to volume growth. As of June 30, 2022, 67% of our sales professionals had been with us for more than three months and 58% had been with us for more than six months. We aim not only to increase the number of physicians ordering for the first time but also to increase repeat orders from existing physician customers.


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?Innovation. Innovation is fundamental to our industry, and for us, it starts
with our ovarian cancer pipeline advancement. In particular, in the third or
fourth quarter this year, we plan to launch our OVAWatch product, which we
believe has a total addressable market of at least three times that of OVA1plus.
We also plan to accelerate the development of our EndoCheck product as we work
on the discovery state for proteins and proteins plus miRNA. We are partnering
with Harvard's Dana-Farber Cancer Institute, Brigham & Women's Hospital, and
Medical University of Lodz for this diagnostic aid. In addition, we plan to
continue our efforts to support research related to the impact of race on the
detection of ovarian cancer. In June 2022, a manuscript arising from clinical
research efforts in the Philippines, which was sponsored by the Company, was
accepted for publication in the International Journal of Environmental Research
and Public Health. The study focuses on the assessment of ovarian cancer risk in
Filipino women.
?Operational Excellence. In the second half of 2022, we plan to achieve our cash
utilization goals and focus on spend that fuels both innovation and growth. We
plan to continue to hire individuals to fill key roles, especially in the
commercial and research and development departments. For us, this type of
commercial spend generates high returns on investment.
Our first LDT algorithm, branded as OVAWatch, focuses on monitoring women with
pelvic masses. The OVAWatch manuscript, "Analytical Validation of a Deep Neural
Network Algorithm for the Detection of Ovarian Cancer," has been published
online in the Journal of Clinical Oncology Clinical Cancer Informatics. This
study was a critical step toward the launch of OVAWatch and, as a result, we
have proceeded toward finalizing the commercialization plan for OVAWatch, which
will occur in two phases. Phase I is a single use point-in-time product and
Phase II will allow for serial monitoring. We plan to focus on the commercial
phase of OVAWatch, including driving provider adoption, during the third and
fourth quarter of 2022. We believe OVAWatch has the potential to expand the
addressable market by three or more times over OVA1plus.
We expect that our second LDT diagnostic algorithm, EndoCheck, will aid in the
diagnosis of endometriosis. We also plan to expand our portfolio of products to
include OVAInherit, which aims to identify risk of malignancy in those patients
who are genetically predisposed to ovarian cancer. This algorithm will include
genetics, proteins and other modalities to assess such risk.
Our Business and Products
We currently market and sell the following products and related services:
(1) OVA1, a blood test intended as an aid to further assess the likelihood of
malignancy in women with an ovarian adnexal mass for which surgery is planned
when the physician's independent clinical and radiological evaluation does not
indicate malignancy; (2) OVERA, a second-generation biomarker reflex intended to
maintain OVA1's high sensitivity while improving specificity; (3) OVA1plus,
a reflex offering which uses OVA1 as the primary test and OVERA as a
confirmation for OVA1 intermediate range results and leverages the strengths of
OVA1's MIA sensitivity and OVERA's (MIA2G) specificity and as a result reduces
false elevations by over 40%; (4) Aspira GenetiX, a genetic test for hereditary
gynecologic cancer risk, with a core focus on hereditary female reproductive
cancers, including breast, ovarian, endometrial, uterine and cervical cancers;
and (5) Aspira Synergy, our decentralized testing platform and cloud service for
decentralized global access of both protein biomarker and hereditary genetic
testing. We plan to make OVA1, OVERA, OVA1plus and Aspira GenetiX and future
technology available through Aspira Synergy. Our OVA1 test received FDA de novo
classification in September 2009. OVA1 comprises instruments, assays, reagents,
and the OVACALC software, which includes a proprietary algorithm that produces a
risk score. Our OVERA test, which includes an updated version of OVACALC,
received FDA 510(k) clearance in March 2016. OVA1 and OVERA each use the Roche
cobas 4000, 6000 and 8000 platforms for analysis of proteins.  Revenue from all
of these sources is included in the results of operations in total revenue for
the six months ended June 30, 2022.
In 2021, we began entering into decentralized arrangements with large healthcare
networks and physician practices for our Aspira Synergy platform offering
specialty and genetic testing solutions.  The modules available under Aspira
Synergy include our flagship OVA1plus risk assessment and Genetics Carrier
Screening. The Company has entered into four technology transfer agreements
since the launch of Aspira Synergy. The first two
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agreements are with two of the nation's largest and leading independent women's
healthcare groups which together include approximately 750 providers and serve
approximately 950,000 patients annually.  The other agreements are with
independent regional laboratories. In the fourth quarter of 2021, we launched
the Aspira Synergy product with a national women's healthcare group.
We are developing three additional products and related services, including two
diagnostic algorithms, OVAWatch and EndoCheck, as well as a high-risk diagnostic
algorithm, OVAInherit. These products may be launched as LDTs or FDA-cleared
tests.
?OVAWatch has been developed and is validated for use in Aspira's CLIA-certified
high complexity lab as a non-invasive risk assessment test for use in
conjunction with clinical assessment and imaging to determine ovarian cancer
risk for patients with an adnexal mass who are not yet scheduled for surgery.
The commercialization plan for OVAWatch will occur in two phases. Phase I is a
single use, point-in-time risk assessment test and Phase II will allow for
serial monitoring. We will focus on the commercial phase of the OVAWatch single
use risk assessment test, including driving provider adoption, during the third
and fourth quarter of 2022. The timing will depend on the results of a clinical
validation study that we expect to complete this summer. We believe OVAWatch has
the potential to significantly expand the addressable market over OVA1plus. The
launch of the serial monitoring test is targeted for the second half of 2023
following the expected publication of data from the ongoing prospective serial
monitoring clinical study.
?EndoCheck, an in-development non-invasive blood test to be used in conjunction
with other non-surgical modalities, is designed to be an aid in the detection of
endometriosis and address the patient population of women who are experiencing
moderate to severe pelvic pain to provide non-invasive confirmation that their
symptoms are indicative of endometriosis. The goal of this test is to support an
early diagnosis and direct appropriate medical management that potentially
reduces the progression of disease. Current detection methods for endometriosis
require surgery and a surgical biopsy diagnosis and/or visualization diagnosis.
EndoCheck is intended to address this large patient population by using a
non-invasive solution with comparable sensitivity and specificity when compared
to surgical biopsy and/or visualization. We expect that our research
collaboration agreement with Harvard's Dana-Farber Cancer Institute, Brigham and
Women's Hospital, and Medical University of Lodz will bolster our research and
development efforts and scientific resources to accelerate commercialization of
EndoCheck. Our goal is to launch EndoCheck in the second half of 2023 as an LDT.
?OVAInherit will be designed as a non-invasive high-risk diagnostic tool,
intended for those patients with or without a pelvic mass who are genetically
predisposed to ovarian cancer. It will use genetics, proteins and other
modalities to assess the likelihood that a woman has an early-stage
gynecological cancer that is not visible using traditional ultrasound
methodologies, and thereby to aid in early diagnoses. Our OVAInherit related
clinical studies, OVANex and OVA360, initiated in late 2019 and early 2020,
respectively, are focused on developing data to support a diagnostic test for
the early detection of ovarian cancer. Our collaboration
work with Harvard's Dana-Farber Cancer Institute, Brigham and Women's
Hospital, and Medical University of Lodz resulted in a Phase 1 Proof of Concept
evaluation, which surpassed all required metrics. Based on the outcome data, we
have begun implementing Phase 2 of the study. In Phase 2, the team is evaluating
the combined potential impact of our protein biomarker algorithms and the
investigators' miRNA technology in the development of this assay and platform.
?We ultimately plan to commercialize each of OVA1, OVERA, OVA1plus, Aspira
GenetiX, OVAWatch, EndoCheck, OVAInherit and Aspira Synergy on a global
level. We currently hold CE marks for OVA1 and OVERA. In addition, each of OVA1
and OVERA, and the reflex offering, OVA1plus, will be offered on our global
testing platform, which will allow both tests to be deployed worldwide.
Outside of the United States, we have studies in process to validate OVERA and
OVA1 in specific populations. This includes active international distribution
agreements for OVERA with Pro-Genetics LTD in Israel and MacroHealth, Inc. in
the Philippines. The MacroHealth, Inc. agreement was our first agreement
regarding our decentralized technology, Aspira Synergy, for OVERA specimen
testing.
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We own and operate ASPiRA LABS, based in Austin, Texas, a Clinical Chemistry and
Endocrinology Laboratory accredited by the College of American Pathologists,
which specializes in applying biomarker-based technologies to address critical
needs in the management of gynecologic cancers and disease. ASPiRA LABS provides
expert diagnostic services using a state-of-the-art biomarker-based risk
assessment to aid in clinical decision making and advance personalized treatment
plans. The lab currently processes our OVA1 and OVERA tests, and we plan to
expand the testing to other gynecologic conditions with high unmet need. We also
plan to develop and perform LDTs at ASPiRA LABS. ASPiRA LABS holds a CLIA
Certificate of Accreditation and a state laboratory license in California,
Maryland, New York, Pennsylvania and Rhode Island. The Centers for Medicare &
Medicaid Services ("CMS") issued a supplier number to ASPiRA LABS in 2015.
In the United States, revenue for diagnostic tests comes from several sources,
including third-party payers such as insurance companies, government healthcare
programs, such as Medicare and Medicaid, client bill accounts and patients.
Novitas Solutions, a Medicare contractor, covers and reimburses for OVA1 tests
performed in certain states, including Texas. Due to OVA1 tests being performed
exclusively at ASPiRA LABS in Texas, the local coverage determination from
Novitas Solutions essentially provides national coverage for patients enrolled
in Medicare as well as Medicare Advantage health plans. ASPiRA LABS also bills
third-party commercial and other government payers as well as client bill
accounts and patients for OVA1.
In November 2016, the American College of Obstetricians and Gynecologists
("ACOG") issued Practice Bulletin Number 174 which included OVA1, defined as the
"Multivariate Index Assay", outlining ACOG's clinical management guidelines for
adnexal mass management. Practice Bulletin Number 174 recommends that
obstetricians and gynecologists evaluating women with adnexal masses who do not
meet Level A criteria of a low risk transvaginal ultrasound should proceed with
Level B clinical guidelines. Level B guidelines state that the physician may use
risk assessment tools such as existing CA125 technology or OVA1 ("Multivariate
Index Assay") as listed in the bulletin. Based on this, OVA1 achieved parity
with CA125 as a Level B clinical recommendation for the management of adnexal
masses.
Practice Bulletins summarize current information on techniques and clinical
management issues for the practice of obstetrics and gynecology. Practice
Bulletins are evidence-based documents, and recommendations are based on the
evidence. This is also the only clinical management tool used for adnexal
masses. Although there are Practice Bulletins, guidelines do not exist for
adnexal masses. ACOG guidelines do exist, however, for ovarian cancer
management.
Recent Developments
Leadership Updates
On June 23, 2022, the Company's stockholders elected Robert Auerbach, M.D. and
Ruby Sharma to the Company's board of directors. The Company's board of
directors has appointed Dr. Robert Auerbach as a member of the Compensation
Committee and Nominating and Corporate Governance Committee and has appointed
Ruby Sharma as Audit Committee Chair, replacing James T. LaFrance, who stepped
down as Audit Committee Chair, each effective June 23, 2022.
On July 5, 2022, Ryan Phan, Ph.D. joined the Company as Chief Operating and
Scientific Officer.  Dr. Phan previously worked for CareDx where he served as
Senior Vice President of Lab Services and Medical Director.
Business and Listing Updates
On June 1, 2022, the Company received a deficiency letter from the Listing
Qualifications Department of the Nasdaq Stock Market notifying the Company that,
for the preceding 30 consecutive business days, the closing bid price for the
Company's common stock was below the minimum $1.00 per share requirement for
continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule
5550(a)(2) (the "Minimum Bid Price Rule"). As provided in the Nasdaq rules, we
have 180 calendar days, or until November 28, 2022, to regain compliance with
the Minimum Bid Price Rule. We may achieve compliance during this period if the
closing bid
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price of Aspira common stock is at least $1.00 per share for a minimum of 10
consecutive business days. If we fail to regain compliance on or prior to
November 28, 2022, we may be eligible for an additional 180-calendar day
compliance period. There is no assurance that we will be able to regain
compliance by the November 28, 2022 deadline or the additional 180-calendar day
extended deadline, and there is no assurance that we will otherwise maintain
compliance with this or any of the other Nasdaq continued listing requirements.
On June 4, 2022, we entered into a new, exclusive agreement with BioReference
Health, LLC, formerly known as BioReference Laboratories, Inc. ("BRL") whereby
BRL will jointly sell OVA1plus along with our direct salesforce, thus expanding
the scope, reach, and breadth of the combined geographic sales footprint.
On August 8, 2022, we entered into a sponsored research agreement with Harvard's
Dana-Farber Cancer Institute, Brigham and Women's Hospital, and Medical
University of Lodz for the generation of a multi-omic, non-invasive diagnostic
aid to identify endometriosis based on circulating microRNAs and proteins.  This
collaboration aims to develop a technology to guide medical and clinical
management of women without a pelvic mass presenting with symptoms of
endometriosis and to limit surgical evaluation for those cases where
non-invasive tests are equivocal or in patients for whom surgical excision of
endometriosis is clinically indicated. This research collaboration agreement
will build on our extensive prior research and development efforts and will
expand our access to appropriate samples as well as scientific resources
required to accelerate the commercialization of our EndoCheck diagnostic test.
We believe this agreement will help to ensure a launch of an endometriosis
diagnostic test in the second half of 2023.
On June 29, 2022, we entered into a standalone agreement with Scarlet Health, an
innovative mobile phlebotomy solution providing collections for Aspira's
patients from the comfort of their home.
Pipeline Expansion Strategy: We are focused on execution of the following core
strategic business drivers in delivering state-of-the-art gynecologic health
solutions starting with ovarian cancer diagnostics, and specialized laboratory
services to build long-term value for our investors:

1)Maximizing the existing OVA1plus opportunity by actively pursuing broad
physician adoption and payer coverage;
2)Leveraging our existing database and specimen bank while building our specimen
and data repository of gynecologic pelvic mass patients;
3)Expanding our product offerings to aid in diagnostic and risk stratification
for additional women's health diseases with a focus on pelvic disease conditions
such as pelvic mass monitoring and endometriosis by adding additional
gynecologic bio-analytic solutions involving biomarkers, genetics, other
modalities (e.g., imaging), clinical risk factors and patient data; this may
occur via licensing or other business development and merger and acquisition
opportunities that represent synergistic offerings in women's health;
4)Coupling our OVA products with an individual's hereditary genetic risk to
refine ovarian cancer risk assessment for high-risk populations; and
5)Expanding our proprietary decentralization platform, Aspira Synergy, to allow
more large healthcare networks and physician practices to access OVA and Aspira
GenetiX algorithms as a technology transfer service, while also obtaining access
to de-identified data through these arrangements to allow us to enhance our
algorithm development on a cost-effective basis.
We believe that these business drivers will contribute significantly to
addressing unmet medical needs for women facing gynecologic disease and
conditions and the continued development of our business.
Recent Publications

In parallel to building our OVA platform offering and our commercial deployment, we have been working on several key publications and product extensions. The OVAWatch manuscript, "Analytical Validation of a Deep Neural Network Algorithm for the Detection of Ovarian Cancer," has been published online in the Journal of Clinical Oncology Clinical Cancer Informatics. The Company has prepared an application for a Proprietary Laboratory Analyses code with the

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American Medical Association for the OVAWatch test to distinguish it from OVA1plus with an expectation that Novitas and other payers will apply the OVA1plus Centers for Medicare & Medicaid Services fee to OVAWatch, ensuring consistent coverage and pricing for both OVA products. COVID-19 Pandemic

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The novel coronavirus has since spread to over 100 countries, including every state in the United States. In March 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic, and the United States declared a national emergency with respect to the coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel periodically throughout the pandemic. In order to reduce the impact of limitations on visiting physician offices due to closures and quarantines, we implemented other mechanisms for reaching physicians such as virtual sales representative meetings, Key Opinion Leader presentations, and increased digital sales and marketing. Patient enrollment for our planned clinical research studies has been slower than originally planned due to the impact of clinic closures and patients not seeking medical care in some states, which has led to delays in the completion of such studies. Given the potential for future resurgences of COVID-19 cases and the variety of federal and state actions taken to contain them, we are unable to estimate the potential future impact of the COVID-19 pandemic on our business, results of operations or cash flows as of the date of the filing of this Form 10-Q. In addition, as of the date of the filing of this Form 10-Q, we have approximately four months of reagents, one of our key testing supplies, in stock, depending on volume of tests performed, and we are working with the manufacturer to ensure a consistent supply over the next six months. As previously disclosed, we have put in place staffing and reagent contingency plans to ensure there is no down time at our lab. We believe the lab could continue to operate in the event any isolated infection were to impact a portion of the workforce. The full impact of the COVID-19 pandemic continues to evolve as of the date of the filing of this Form 10-Q Critical Accounting Policies and Estimates

Our product revenue is generated by performing diagnostic services using our OVA1, OVERA, OVA1plus or Aspira GenetiX tests, and the service is completed upon the delivery of the test result to the prescribing physician. The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. Under ASC Topic 606, Revenue from Contracts with Customers, all revenue is recognized upon completion of the OVA1, OVERA, OVA1plus or Aspira GenetiX test and delivery of test results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, we consider factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and us, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management. For OVA1, OVERA, OVA1plus and Aspira GenetiX tests, we also review our patient account population and determine an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. When evaluated for collectability, this results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis.


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Results of Operations - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 The selected summary financial and operating data of the Company for the three months ended June 30, 2022 and 2021 were as follows:

                                  Three Months Ended
                                       June 30,             Increase (Decrease)
(dollars in thousands)             2022        2021         Amount               %
Revenue:
Product                         $     2,018  $   1,720  $           298           17
Genetics                                 48         79             (31)         (39)
Total revenue                         2,066      1,799              267           15
Cost of revenue:
Product                               1,036        839              197           23
Genetics                                 64        264            (200)         (76)
Total cost of revenue                 1,100      1,103              (3)          (0)
Gross profit                            966        696              270           39
Operating expenses:
Research and development              1,410      1,471             (61)          (4)
Sales and marketing                   3,580      4,018            (438)         (11)
General and administrative            4,196      3,279              917           28
Total operating expenses              9,186      8,768              418            5
Loss from operations                (8,220)    (8,072)            (148)            2
Interest (expense) income, net         (10)          3             (13)          433
Other (expense) income, net            (13)        995          (1,008)          101
Net loss                        $   (8,243)  $ (7,074)  $       (1,169)           17


Product Revenue. Product revenue was $2,018,000 for the three months ended June
30, 2022, compared to $1,720,000 for the same period in 2021. Revenue for ASPiRA
LABS is recognized when the OVA1, OVERA, or OVA1plus test is completed based on
estimates of what we expect to ultimately realize. The 17% product revenue
increase is due to an increase in OVA1 test volume compared to the prior year,
partially offset by a lower revenue average unit price ("AUP"), which decreased
from $378 in the second quarter of 2021 to $373 in the second quarter of 2022.
The product revenue increase was also driven by an increased volume of tests
performed for higher AUP payers, such as those for Medicare and insurance
carriers.
Medicaid represents approximately 12.0% of volume in the three months ended June
30, 2022, at an AUP of $90. This is compared to 12.2% of volume in the same
period in 2021, at an AUP of $92. Our OVA1plus AUP without Medicaid was $414 for
the three months ended June 30, 2022, compared to $417 for the same period in
2021. Product revenue increased 10% sequentially for the second quarter of 2022
as compared to the first quarter of 2022.
The number of Product tests performed increased 19% to 5,411 during the three
months ended June 30, 2022, compared to 4,553 Product tests for the same period
in 2021. The number of Product tests performed increased 12% sequentially during
the second quarter 2022 as compared to the first quarter 2022. These increases
are a result of increased access to provider offices and increased investment in
our current commercial channel. We expect revenue to continue to increase in
2022 due to our investment in key salesforce hires and strategic product
development.
Genetics Revenue. Genetics revenue was $48,000 for the three months ended June
30, 2022, compared to $79,000 for the same period in 2021. Revenue for Aspira
GenetiX is recognized when the Aspira GenetiX test is completed based on
estimates of what we expect to ultimately realize. The 39% genetics revenue
decrease is primarily due to decreased volumes and decreased AUP as compared to
the same period in 2021.
                                       24

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Cost of Revenue - Product. Cost of product revenue was $1,036,000 for the three
months ended June 30, 2022, compared to $839,000 for the same period in 2021,
representing an increase of $197,000, or 23%, due primarily to increased
personnel costs, lab supply costs, and software license fees resulting from the
increase in tests performed compared to the prior year.
Cost of Revenue - Genetics. Cost of genetics revenue, which consisted primarily
of personnel costs and consulting expense after the launch of Aspira GenetiX,
was $64,000 for the three months ended June 30, 2022, compared to $264,000 for
the same period in 2021. The decrease in cost was due to a decrease of $111,000
in personnel costs, and a decrease in volume of tests performed as compared to
the same period in 2021.
Gross Profit Margin.  Gross profit margin for OVA1plus decreased to 48.6% for
the three months ended June 30, 2022, compared to 52.0% for the same period in
2021. This decrease was primarily related to increased personnel costs, lab
supply costs, and software license fees.
Research and Development Expenses.  Research and development expenses represent
costs incurred to develop our technology and carry out clinical studies, and
include personnel-related expenses, regulatory costs, reagents and supplies used
in research and development laboratory work, infrastructure expenses, contract
services and other outside costs. Research and development expenses for the
three months ended June 30, 2022 decreased by $61,000, or 4%, compared to the
same period in 2021. Compared to the first quarter of 2022 research and
development expenses increased $62,000, or 5%. This increase was primarily due
to clinical validity and product development costs related to OVAWatch. We
expect research and development expenses to increase in 2022, sequentially as
well as relative to 2021, as a result of increased projects, clinical studies
and our research collaboration agreements.
Sales and Marketing Expenses.  Our sales and marketing expenses consist
primarily of personnel-related expenses, education and promotional expenses.
These expenses include the costs of educating physicians and other healthcare
professionals regarding OVA1, OVERA, OVA1plus and Aspira GenetiX. Sales and
marketing expenses also include the costs of sponsoring continuing medical
education, medical meeting participation, and dissemination of scientific and
health economic publications. Sales and marketing expenses for the three months
ended June 30, 2022 decreased by $438,000, or 11%, compared to the same period
in 2021. This decrease was primarily due to decreased personnel, recruiting and
consulting expenses. We expect sales and marketing expenses to increase
sequentially in 2022 as we prepare to launch OVAWatch.
General and Administrative Expenses.  General and administrative expenses
consist primarily of personnel-related expenses, professional fees and other
costs, including legal, finance and accounting expenses and other infrastructure
expenses. General and administrative expenses for the three months ended June
30, 2022 increased by $917,000, or 28%, compared to the same period in 2021.
This increase was primarily due to increased personnel expenses of $915,000. We
expect general and administrative expenses to remain relatively flat
sequentially in 2022.

?

                                       25

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Results of Operations - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 The selected summary financial and operating data of the Company for the six months ended June 30, 2022 and 2021 were as follows:

                                   Six Months Ended
                                       June 30,             Increase (Decrease)
(dollars in thousands)             2022        2021         Amount              %
Revenue:
Product                         $    3,853  $    3,136  $          717           23
Genetics                               106         159            (53)         (33)
Total revenue                        3,959       3,295             664           20
Cost of revenue:
Product                              1,893       1,494             399           27
Genetics                               139         502           (363)         (72)
Total cost of revenue                2,032       1,996              36            2
Gross profit                         1,927       1,299             628           48
Operating expenses:
Research and development             2,758       2,343             415           18
Sales and marketing                  8,077       7,126             951           13
General and administrative           8,559       5,788           2,771           48
Total operating expenses            19,394      15,257           4,137           27
Loss from operations              (17,467)    (13,958)         (3,509)           25
Interest (expense) income, net        (28)        (21)             (7)           33
Other (expense) income, net           (16)         985         (1,001)        (102)
Net loss                        $ (17,511)  $ (12,994)  $      (4,517)           35


Product Revenue. Product revenue was $3,853,000 for the six months ended June 30, 2022, compared to $3,136,000 for the same period in 2021. Revenue for ASPiRA LABS is recognized when the OVA1, OVERA, or OVA1plus test is completed based on estimates of what we expect to ultimately realize. The 23% product revenue increase is primarily due to an increase in OVA1 test volume compared to the prior year, partially offset by a modest decrease in AUP, which decreased from $377 in the first half of 2021 to $376 in the first half of 2022. Medicaid represents approximately 11.8% of volume in the six months ended June 30, 2022, at an AUP of $90. This is compared to 11.7% of volume in the first half of 2021, at an AUP of $90. Our OVA1plus AUP without Medicaid was $415 for the six months ended June 30, 2022, compared to $417 for the same period in 2021. The number of Product tests performed increased 23% to 10,257 during the six months ended June 30, 2022, compared to 8,328 Product tests for the same period in 2021. This increase was due to increased access to provider offices and increased investment in our current commercial channel. Genetics Revenue. Genetics revenue was $106,000 for the six months ended June 30, 2022, compared to $159,000 for the same period in 2021. Revenue for Aspira GenetiX is recognized when the Aspira GenetiX test is completed based on estimates of what we expect to ultimately realize. The 33% genetics revenue decrease is primarily due to decreased volumes as compared to the same period in 2021, in addition to the AUP decreasing to $424 from $483 from the same period in 2021.

                                       26

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Cost of Revenue - Product. Cost of product revenue was $1,893,000 for the six
months ended June 30, 2022, compared to $1,494,000 for the same period in 2021,
representing an increase of $399,000, or 27%, due primarily to increased
personnel costs, lab supply costs, and software license fees resulting from the
increase in tests performed compared to the prior year.
Cost of Revenue - Genetics. Cost of genetics revenue, which consisted primarily
of personnel costs and consulting expense after the launch of Aspira GenetiX,
was $139,000 for the six months ended June 30, 2022, compared to $502,000 for
the same period in 2021. The decrease in cost was due to a decrease of $219,000
in personnel costs and a decrease in volume of tests performed as compared to
the same period in 2021.
Gross Profit Margin.  Gross profit margin for OVA1plus decreased slightly to
50.8% for the six months ended June 30, 2022, compared to 53.0% for the same
period in 2021. This decrease was primarily related to increased personnel
costs, lab supply costs, and software license fees.
Research and Development Expenses.  Research and development expenses represent
costs incurred to develop our technology and carry out clinical studies, and
include personnel-related expenses, regulatory costs, reagents and supplies used
in research and development laboratory work, infrastructure expenses, contract
services and other outside costs. Research and development expenses for the six
months ended June 30, 2022 increased by $415,000, or 18%, compared to the same
period in 2021. This increase was primarily due to clinical validity and product
development costs related to OVAWatch, our third-generation product, as well as
investments in Aspira Synergy, increased personnel expenses, associated with
EndoCheck regulatory clearance and severance paid in relation to our
reorganization of $132,000. We expect research and development expenses to
increase in 2022, sequentially as well as relative to 2021, as a result of
increased projects and clinical studies.
Sales and Marketing Expenses.  Our sales and marketing expenses consist
primarily of personnel-related expenses, education and promotional expenses.
These expenses include the costs of educating physicians and other healthcare
professionals regarding OVA1, OVERA, OVA1plus and Aspira GenetiX. Sales and
marketing expenses also include the costs of sponsoring continuing medical
education, medical meeting participation, and dissemination of scientific and
health economic publications. Sales and marketing expenses for the six months
ended June 30, 2022 increased by $951,000, or 13%, compared to the same period
in 2021. This increase was primarily due to increased personnel, severance paid
in relation to our reorganization, commissions, marketing expenses, sales
meetings and travel and entertainment costs. We expect sales and marketing
expenses to increase sequentially in 2022, due to investing in key strategic
hires and product portfolio expansion.
During the first quarter of 2022, we executed a commercial reorganization
resulting in the separation of a number of employees. The changes were aimed at
enhancing our national sales force and driving the accelerated adoption of
OVA1plus as the standard of care for early risk detection of ovarian cancer in
women who have been planned for surgery. The organizational changes resulted in
the recording of one-time severance, separation, and settlement payments in the
first quarter of approximately $1,284,000 including estimated future payouts, of
which $1,085,000 paid related to sales and marketing, partially offset by
insurance reimbursement of $523,000, of which $503,000 related to sales and
marketing.
General and Administrative Expenses.  General and administrative expenses
consist primarily of personnel-related expenses, professional fees and other
costs, including legal, finance and accounting expenses and other infrastructure
expenses. General and administrative expenses for the six months ended June 30,
2022 increased by $2,771,000, or 48%, compared to the same period in 2021. This
increase was primarily due to increased personnel expenses of $2,311,000 and
legal fees of $322,000. Severance paid to general and administrative-related
personnel was immaterial. We expect general and administrative expenses to
remain relatively flat sequentially in 2022.

?

                                       27

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Liquidity and Capital Resources We plan to continue to expend resources selling and marketing OVA1, OVERA, OVA1plus and Aspira GenetiX and developing additional diagnostic tests and service capabilities. We plan to launch our next generation ovarian cancer risk assessment test, OVAWatch, in the second half of 2022. We have incurred significant net losses and negative cash flows from operations since inception, and as a result have an accumulated deficit of approximately $489,239,000 as of June 30, 2022. We also expect to incur a net loss and negative cash flows from operations for 2022. Working capital levels may not be sufficient to fund operations as currently planned through the next twelve months, absent a significant increase in revenue over historic revenue or additional financing. Given the above conditions, there is substantial doubt about our ability to continue as a going concern. We expect to raise capital through sources that may include public or private equity offerings, debt financings, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or on terms acceptable to us. If we are unable to obtain additional capital, we may not be able to continue sales and marketing, research and development, or other operations on the scope or scale of current activity, and that could have a material adverse effect on our business, results of operations and financial condition. As discussed in Note 2 to the condensed consolidated financial statements, in March 2016, we entered into a loan agreement (as amended on March 7, 2018 and April 3, 2020, the "DECD Loan Agreement") with the State of Connecticut Department of Economic and Community Development (the "DECD"), pursuant to which we may borrow up to $4,000,000 from the DECD.


The loan may be prepaid at any time without premium or penalty. An initial
disbursement of $2,000,000 was made to us on April 15, 2016 under the DECD Loan
Agreement. On December 3, 2020, we received a disbursement of the remaining
$2,000,000 under the DECD Loan Agreement, as we had achieved the target
employment milestone necessary to receive an additional $1,000,000 under the
DECD Loan Agreement and the DECD determined to fund the remaining $1,000,000
under the DECD Loan Agreement after concluding that the required revenue target
would likely have been achieved in the first quarter of 2020 in the absence of
the impacts of COVID-19.
Under the terms of the DECD Loan Agreement, we may be eligible for forgiveness
of up to $1,500,000 of the principal amount of the loan if we achieve certain
job creation and retention milestones by December 31, 2022. Conversely, if we
are either unable to retain 25 full-time employees with a specified average
annual salary for a consecutive two-year period or do not maintain our
Connecticut operations through March 22, 2026, the DECD may require early
repayment of a portion or all of the loan plus a penalty of 5% of the total
funded loan.  For additional information, see Note 2 of our consolidated
financial statements.
As discussed in Note 2 to the condensed consolidated financial statements, on
May 1, 2020, we obtained the Paycheck Protection Program loan (the "PPP Loan")
from BBVA USA in the aggregate amount of approximately $1,006,000. We applied
for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the
SBA confirmed the waiver of our repayment of the PPP Loan, which was recognized
as a gain in other income in 2021. We remain subject to an audit of the PPP
loan. There is no assurance that we will not be required to repay all or a
portion of the PPP Loan as a result of any such audit.

As discussed in Note 3 to the condensed consolidated financial statements, on February 8, 2021, the Company completed a public offering (the "2021 Offering") resulting in net proceeds of approximately $47,720,000, after deducting underwriting discounts and offering expenses. There was a change in estimate in the third quarter of 2021 in the amount of $138,000 relating to an expense reversal of offering costs.

In connection with a private placement offering of common stock and warrants we completed in May 2013, we entered into a stockholders agreement which, among other things, gives two of the primary investors in that offering the right to participate in any future equity offerings by the Company on the same price and terms as

                                       28

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other investors. In addition, the stockholders agreement prohibits us from
taking certain material actions without the consent of at least one of the two
primary investors in that offering. These material actions include:
?Making any acquisition with a value greater than $2 million;
?Offering, selling or issuing any securities senior to Aspira's common stock or
any securities that are convertible into or exchangeable or exercisable for
securities ranking senior to Aspira's common stock;
?Taking any action that would result in a change in control of the Company or an
insolvency event; and
?Paying or declaring dividends on any securities of the Company or distributing
any assets of the Company other than in the ordinary course of business or
repurchasing any outstanding securities of the Company.
The foregoing rights terminate for a primary investor when that investor ceases
to beneficially own less than 50% of the shares and warrants (taking into
account shares issued upon exercise of the warrants), in the aggregate, that
were purchased at the closing of the 2013 private placement.
As mentioned, we have incurred significant net losses and negative cash flows
from operations since inception, and we expect to continue to incur a net loss
and negative cash flows from operations in 2022. At June 30, 2022 we had an
accumulated deficit of ($489,239,000) and stockholders' equity of $14,122,000.
As of June 30, 2022, we had $20,480,000 of cash and cash equivalents (excluding
restricted cash of $250,000), $7,044,000 of current liabilities, and working
capital of $15,912,000. There can be no assurance that we will achieve or
sustain profitability or positive cash flow from operations. While we expect to
grow revenue through ASPiRA LABS, there is no assurance of our ability to
generate substantial revenues and cash flows from ASPiRA LABS' operations. We
expect revenue from our products to be our only material, recurring source of
cash in 2022. In addition, the impact of the COVID-19 pandemic and actions taken
to contain it on our liquidity for 2022 cannot be estimated as of the date of
the filing of this Form 10-Q.
Our future liquidity and capital requirements will depend upon many factors,
including, among others:
?resources devoted to sales, marketing and distribution capabilities;
?the rate of OVA1, OVERA, OVA1plus and Aspira GenetiX product adoption by
physicians and patients;
?the rate of product adoption by healthcare systems and large physician
practices of the decentralized distribution agreements for OVA1, OVERA and
OVA1plus;
?the insurance payer community's acceptance of and reimbursement for our
products;
?our plans to acquire or invest in other products, technologies and businesses;
?the potential need to add study sites to access additional patients to maintain
clinical timelines; and
?the impact of the COVID-19 pandemic and the actions taken to contain it, as
discussed above.
We expect cash utilization in the second half of 2022 to decrease from the first
half of 2022. Note that the first quarter of 2022 had personnel costs, including
those associated with our commercial reorganization. In addition, we had our
annual performance plan payout in the first quarter, a cost that will not be
incurred in the remaining three quarters of 2022. In the second quarter of 2022,
the impact of our operational excellence strategic initiatives began, most
notably with respect to reduced consulting costs as we focused on innovation
focused on OVAWatch and EndoCheck. We also enhanced our sales and marketing in
preparation for the BRL collaboration and the launch of OVAWatch. We expect cash
utilization to increase in the third quarter of 2022 in connection with our
research and collaboration commitments. In addition, we expect increased costs
in commercial and research and development during the third quarter of 2022, as
we invest in talent to deliver on our goals. We expect to see sequential
improvement in net cash utilization in the fourth quarter of 2022 as we do not
plan to incur one-time research and collaboration costs, which may be incurred
in the third quarter, and as we start to see the impact of our anticipated top
line growth.

                                       29

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Net cash used in operating activities was $16,477,000 for the six months ended
June 30, 2022, resulting primarily from the net loss reported of $17,511,000,
which includes non-cash expenses in the amount of $1,448,000 related to stock
compensation expense and $128,000 related to depreciation and amortization,
offset by changes in prepaid expense and other assets of $408,000 and changes in
accounts payable, accrued liabilities and other liabilities of $855,000,
consisting of a decrease in short-term debt of $519,000, partially offset by
changes in accounts receivable of $85,000 and inventory of $17,000.
Net cash used in operating activities was $11,745,000 for the six months ended
June 30, 2021, resulting primarily from the net loss reported of $12,994,000,
which includes non-cash items such as stock compensation expense of $1,771,000,
PPP loan forgiveness of $1,006,000 and depreciation and amortization of
$172,000, offset by changes in prepaid expense and other assets of $350,000 and
changes in accounts payable, accrued liabilities and other liabilities of
$208,000, partially offset by changes in accounts receivable of $208,000 and
inventory of $71,000.
Net cash used in investing activities was $105,000 and $136,000 for the six
months ended June 30, 2022 and 2021, respectively, which consisted of property
and equipment purchases.
Net cash used in financing activities was $118,000 for the six months ended June
30, 2022, which primarily included principal payments on the DECD loan. Net cash
provided by financing activities was $48,236,000 for the six months ended June
30, 2021, which resulted primarily from the February 2021 public offering,
resulting in net proceeds to the Company of approximately $47,721,000, after
deducting underwriting discounts and offering expenses of $515,000. There was a
change in estimate in the third quarter of 2021 in the amount of $137,000
relating to an expense reversal of offering costs.
We have significant NOL carryforwards as of June 30, 2022 for which a full
valuation allowance has been provided due to our history of operating losses.
Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"), as
well as similar state provisions may restrict our ability to use our NOL credit
carryforwards due to ownership change limitations occurring in the past or that
could occur in the future. These ownership changes may also limit the amount of
NOL credit carryforwards that can be utilized annually to offset future taxable
income and tax, respectively.
Legislation commonly referred to as the Tax Cuts and Jobs Act was enacted in
December 2017. As a result of the Tax Cuts and Jobs Act of 2017, federal NOLs
arising before January 1, 2018, and federal NOLs arising after January 1, 2018,
are subject to different rules. The Company's pre- 2018 federal NOLs will
expire in varying amounts from 2022 through 2037, if not utilized? and can
offset 100% of future taxable income for regular tax purposes. Any federal NOLs
arising after January 1, 2018, can generally be carried forward indefinitely and
can offset up to 80% of future taxable income. State NOLs will expire in varying
amounts from 2022 through 2037 if not utilized. Our ability to use our NOLs
during this period will be dependent on our ability to generate taxable income,
and the NOLs could expire before the Company generates sufficient taxable
income. The Company's ability to use NOL carryforwards may be restricted due to
ownership change limitations occurring in the past or that could occur in the
future, as required by Section 382, as well as similar state specific
provisions. These ownership changes may also limit the amount of NOL
carryforwards that can be utilized annually to offset future taxable income and
tax, respectively.
Our management believes that Section 382 ownership changes occurred as a result
of our follow-on public offerings in 2011, 2013 and 2015. Any limitation may
result in the expiration of a portion of the NOL carryforwards before
utilization and any NOL carryforwards that expire prior to utilization as a
result of such limitations will be removed from deferred tax assets with a
corresponding reduction of our valuation allowance. Due to the existence of a
valuation allowance, it is not expected that such limitations, if any, will have
an impact on our results of operations or financial position.
                                       30

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Off-Balance Sheet Arrangements As of June 30, 2022, we had no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our condensed consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

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